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Outsider money defines campaigns in Michigan

Detroit Free Press
9:19 a.m. EDT July 21, 2014

Under the present setup, shaped by a series of recent Supreme Court decisions, individuals, corporations and some nonprofit groups are largely free to spend as much as they like, as long as it's spent independently.

WASHINGTON (DETROIT FREE PRESS) - With less than four months until Election Day, Michigan's top races have largely been defined not by the candidates, but by the millions of dollars being spent by outside groups — much of it coming from shadowy, patriotic-sounding organizations that often mask their donors, if not their political intentions.

And their influence is growing.

Earlier this month, the Michigan Campaign Finance Network, a watchdog group, said independent groups like Americans for Prosperity, Freedom Partners, Ending Spending and Senate Majority PAC had spent nearly $14 million so far on TV ads to influence the state's two biggest races — for governor and an open U.S. Senate seat — which is far more than the candidates themselves have spent to date.

But a Free Press analysis showed overall spending of at least $15.6 million or more when counting amounts spent on other top congressional races, as well. And even that figure is conservative because some outside spending that doesn't expressly call for someone's election or defeat often goes unreported.

In 2012, independent spending on the top congressional races in Michigan — not counting spending on the presidential race — was at least $11 million. There was no gubernatorial election that year.

"There's more out there and we know it," said Rich Robinson, executive director of the Michigan Campaign Finance Network. "And voters need to understand whose money is driving it because people don't write five-, six-, seven-figure checks for selfless reasons."

In some cases, however, voters don't have that option.

Donors' identities often are protected by counter-intuitive tax laws. And even in cases where donors are identified, a byzantine trail across a dizzying array of nonprofit groups, corporations and Super PACs can make it difficult to trace where the money is coming from and where it's going.

"The voter has no way of knowing what the intention of the giver is," said Michael Malbin of the Campaign Finance Institute in Washington, D.C. "They short-circuit voter knowledge and voter decision. The system that's developing is allowing people to hide their money ... in convoluted ways."

On Capitol Hill, congressional Republicans are demanding accountability for Internal Revenue Service officials accused of targeting conservative groups for added scrutiny. But questions remain whether some of those tax-exempt social welfare organizations are primarily — and improperly — engaged in politics.

Some of those same groups are also among the biggest spenders in Michigan's top races.

"Congress made it clear that tax-exempt social welfare groups are to be engaged 'exclusively' in social welfare work, not campaign activity," said U.S. Sen. Carl Levin of Michigan, who has pushed for added tax-status scrutiny for liberal and conservative groups alike. "The IRS's failure to enforce that statute has opened a giant loophole."

Donors cough up cash

Under the present setup, shaped by a series of recent Supreme Court decisions, individuals, corporations and some nonprofit groups are largely free to spend as much as they like, as long as it's spent independently. Limits on direct campaign donations were, meanwhile, kept in place.

The system has its supporters, especially among conservatives — but plenty of liberal-backed groups, including those which spend without limit and in some cases hide donors, are active as well.

"Restrictions are nothing more than incumbent protection," said Barney Keller, a spokesman for the Club for Growth, a group with both a traditional political action committee and a Super PAC — both disclose donors — and known for backing candidates who adhere to a strict, conservative path.

Many of the groups are becoming well known to voters, such as the conservative Americans for Prosperity, linked to the Koch brothers, and the environmentalist Next Gen Climate, funded by California billionaire Tom Steyer. Neither is required to disclose donors — though Next Gen Climate Action, its affiliated Super PAC, does.

Other groups active in the state — some, but not all of which disclose — include Ending Spending and Freedom Partners, both conservative, and Senate Majority PAC, a Democratic Super PAC.

In Michigan, Saul Anuzis, a former state Republican Party chairman, said he'd rather have 100% transparency when it comes to who is giving but thinks there are legitimate concerns for donors who don't want to publicly "get the ire of a candidate or group you're going against." As for outside spending, he said, there are few campaigns that can raise enough money internally to win.

High-profile races — like the one this year between former Michigan Secretary of State Terri Lynn Land, a Republican, and Democratic U.S. Rep. Gary Peters for the seat Democrat Levin is leaving — command the most attention, especially with partisan control of the chamber at stake.

Outside interests have already spent more than $6 million on TV ads targeting Peters and an additional $4 million targeting Land. The candidates themselves have spent less than $3 million between them on TV.

Both have criticized the other for the independent groups behind them. Peters, criticized by AFP for his support of health care reform and opposition to the Keystone pipeline, decried "secret money from special interests." On the flip side, Steyer and Next Gen Climate Action are targeting Land as part of a $100-million, seven-state effort that benefits Peters.

But Land has had far more help from independent spenders. Tagged as being beholden to them and wrong on women's issues, she refused to directly discuss outside spending and its role with the Free Press.

Big bucks for governor

But it's not just Land and Peters: Nearly $4.5 million has been spent on TV ads for the governor's race by outside Democratic and Republican associations. Club for Growth has spent nearly $400,000 — with more on the way, apparently — attacking Brian Ellis in his Republican primary challenge of U.S. Rep. Justin Amash in West Michigan.

And a group called Freedom's Defense Fund has spent more than $100,000 to defeat Dave Trott's challenge of U.S. Rep. Kerry Bentivolio, R-Milford.

"The sad part from my perspective," said former U.S. Rep. Steve LaTourette, an Ohio Republican who heads Main Street Partnership, a group defending centrist politicians, "is that it completely permits a small group of people with a lot of money to have a disproportionate voice in who gets elected."

The real-world impact of outside spending has generated some debate. An academic study done at the Ohio State University's Mortiz College of Law found little evidence of improper coordination between campaigns and independent spenders, but said outside groups pose a threat to officeholders — forcing them to toe an ideological line — and can inadvertently take control of a campaign's message.

"Outside groups are doing a lot of the dirty work in political campaigns," said one of the study's authors, Dan Tokaji. Outside spenders "will say, 'This is democracy in action and campaign speech shouldn't be monopolized.' "

The future could hold more independent spending, he said, particularly in state and local races. And with the current Supreme Court, there's little chance of putting limits on it back in the place, though Congress could conceivably take a big step by requiring more disclosure and clarifying tax laws.

"Until Congress acts," he said, "we're going to have a lot of undisclosed donors. (But) I don't see Congress acting any time soon."